Question

Liberalisation was introduced to put an end to those restrictions which became major
hindrances in growth and development and open various sector of the economy?. Explain the
various liberalisation measures introduced in 1991 in the light of above statement.

Answer 1

Dear Student ,

Rules and laws which were aimed at regulating the economic activities became major hindrances in growth and development. Liberalisation was introduced to put an end to these restrictions and open up various sectors of the economy.

Objectives of Liberalization
1) To increase competition amongst domestic industries
2) To encourage foreign trade with other countries with regulated imports and exports.
3) Enhancement of foreign capital and technology.
4) To expand global market frontiers of the country.
5) To diminish the debt burden of the country.

Measures of Liberalization introduced in 1991

1) Deregulation of Industrial Sector :
(i) industrial licensing under which every entrepreneur had to get permission from government officials to start a firm, close a firm or to decide the amount of goods that could be produced
(ii) private sector was not allowed in many industries
(iii) some goods could be produced only in small scale industries and
(iv) controls on price fixation and distribution of selected industrial products.

Regards